Economy of Uruguay
Encyclopedia
Economy of Uruguay
is characterized by an export-oriented agricultural sector, a well-educated work force, and high levels of social spending. After averaging growth of 5% annually during 1996-98, in 1999-2002 the economy suffered a major downturn, stemming largely from the spillover effects of the economic problems of its large neighbors, Argentina
and Brazil
. In 2001-02, Argentine citizens made massive withdrawals of dollars deposited in Uruguayan banks after bank deposits in Argentina were frozen, which led to a plunge in the Uruguayan peso, a banking crisis
, and a sharp economic contraction. Real GDP fell in four years by nearly 20%, with 2002 the worst year. The unemployment rate rose, inflation surged, and the burden of external debt doubled. Financial assistance from the IMF helped stem the damage. Uruguay restructured its external debt in 2003 without asking creditors to accept a reduction on the principal. Economic growth for Uruguay resumed, and averaged 8% annually during the period 2004-08. The 2008-09 global financial crisis put a brake on Uruguay's vigorous growth, which decelerated to 2.9% in 2009. Nevertheless, the country managed to avoid a recession and keep positive growth rates, mainly through higher public expenditure and investment, and GDP growth exceeded 7% in 2010.
Uruguay
Uruguay ,officially the Oriental Republic of Uruguay,sometimes the Eastern Republic of Uruguay; ) is a country in the southeastern part of South America. It is home to some 3.5 million people, of whom 1.8 million live in the capital Montevideo and its metropolitan area...
is characterized by an export-oriented agricultural sector, a well-educated work force, and high levels of social spending. After averaging growth of 5% annually during 1996-98, in 1999-2002 the economy suffered a major downturn, stemming largely from the spillover effects of the economic problems of its large neighbors, Argentina
Argentina
Argentina , officially the Argentine Republic , is the second largest country in South America by land area, after Brazil. It is constituted as a federation of 23 provinces and an autonomous city, Buenos Aires...
and Brazil
Brazil
Brazil , officially the Federative Republic of Brazil , is the largest country in South America. It is the world's fifth largest country, both by geographical area and by population with over 192 million people...
. In 2001-02, Argentine citizens made massive withdrawals of dollars deposited in Uruguayan banks after bank deposits in Argentina were frozen, which led to a plunge in the Uruguayan peso, a banking crisis
2002 Uruguay banking crisis
The Uruguay Banking Crisis was a major banking crisis that hit Uruguay in July 2002. In this, a massive run on banks by depositors caused the government to freeze banking operations. The crisis was caused by a considerable contraction in Uruguay's economy and by over-dependence on neighboring...
, and a sharp economic contraction. Real GDP fell in four years by nearly 20%, with 2002 the worst year. The unemployment rate rose, inflation surged, and the burden of external debt doubled. Financial assistance from the IMF helped stem the damage. Uruguay restructured its external debt in 2003 without asking creditors to accept a reduction on the principal. Economic growth for Uruguay resumed, and averaged 8% annually during the period 2004-08. The 2008-09 global financial crisis put a brake on Uruguay's vigorous growth, which decelerated to 2.9% in 2009. Nevertheless, the country managed to avoid a recession and keep positive growth rates, mainly through higher public expenditure and investment, and GDP growth exceeded 7% in 2010.
Specialties of Uruguay
- Cattle were introduced to Uruguay before its independence by Hernando Arias de Saveedra, the Spanish Governor of Buenos Aires in 1603. Beef exports in 2006 amounted to around 37% of Uruguayan exports.
- Wool is a traditional product exported mainly to America, followed by the UK and India.
- Milk and dairy products. Conaprole, National Cooperative of Milk Producers is the main exporter of dairy products in Latin America (in 2006). The area of the country dedicated to the dairy food is located mainly in the south west.
- Rice. Fine varieties are produced in the lowlands in the east of the country close to Merin lake on the Uruguay-Brazil border. The national company Saman claims to be the main exporter in Latin America. Countries it exports to include Brazil, Iran, Peru, South Africa, Chile, Senegal, Argentina, Paraguay, Bolivia, Ecuador, USA, Canada and China.
- Tourism: Several seaside resorts, like Punta del EstePunta del EstePunta del Este is a resort town on the Atlantic Coast in the Maldonado Department of southeastern Uruguay. It is located on the intersection of Route 10 with Route 39, directly southeast of the department capital Maldonado and about east of Montevideo...
or Punta del DiabloPunta del DiabloPunta del Diablo is a village and seaside locality in Uruguay, Rocha Department, east from the capital Montevideo. According to the 2004 census, its permanent population consisted of 389 inhabitants, mostly fishermen and artisans, while during high tourism season, the population swells to...
in the south-eastern departments of MaldonadoMaldonado DepartmentThe Maldonado Department , with an area of and 140,192 inhabitants, is located to the southeast of Uruguay. Its capital is Maldonado.-Geography and climate:...
and RochaRocha DepartmentRocha is a department in the east of Uruguay. It has natural beauties like Cabo Polonio, Valizas, Santa Teresa. Rocha is well known for its beach towns which swell during the summer holidays...
, regarded as a jet set resort in South America, are main attractions of Uruguay. International cruises call at Montevideo from October to March every year. Also, Uruguay hosts many year-round international conferences. (The original GATT Uruguay Round concerning trade was, as its name suggests, hosted in Uruguay). Montevideo is home to the headquarters (secretariat) of [Mercosur], the Common Market of the South, whose full members are Uruguay, ArgentinaArgentinaArgentina , officially the Argentine Republic , is the second largest country in South America by land area, after Brazil. It is constituted as a federation of 23 provinces and an autonomous city, Buenos Aires...
, BrazilBrazilBrazil , officially the Federative Republic of Brazil , is the largest country in South America. It is the world's fifth largest country, both by geographical area and by population with over 192 million people...
, ParaguayParaguayParaguay , officially the Republic of Paraguay , is a landlocked country in South America. It is bordered by Argentina to the south and southwest, Brazil to the east and northeast, and Bolivia to the northwest. Paraguay lies on both banks of the Paraguay River, which runs through the center of the...
and VenezuelaVenezuelaVenezuela , officially called the Bolivarian Republic of Venezuela , is a tropical country on the northern coast of South America. It borders Colombia to the west, Guyana to the east, and Brazil to the south...
, associate members BoliviaBoliviaBolivia officially known as Plurinational State of Bolivia , is a landlocked country in central South America. It is the poorest country in South America...
, ChileChileChile ,officially the Republic of Chile , is a country in South America occupying a long, narrow coastal strip between the Andes mountains to the east and the Pacific Ocean to the west. It borders Peru to the north, Bolivia to the northeast, Argentina to the east, and the Drake Passage in the far...
, ColombiaColombiaColombia, officially the Republic of Colombia , is a unitary constitutional republic comprising thirty-two departments. The country is located in northwestern South America, bordered to the east by Venezuela and Brazil; to the south by Ecuador and Peru; to the north by the Caribbean Sea; to the...
, EcuadorEcuadorEcuador , officially the Republic of Ecuador is a representative democratic republic in South America, bordered by Colombia on the north, Peru on the east and south, and by the Pacific Ocean to the west. It is one of only two countries in South America, along with Chile, that do not have a border...
and PeruPeruPeru , officially the Republic of Peru , is a country in western South America. It is bordered on the north by Ecuador and Colombia, on the east by Brazil, on the southeast by Bolivia, on the south by Chile, and on the west by the Pacific Ocean....
. - Software and consulting. Uruguay's well-educated workforce and lower-than-international wages have put Uruguay on the IT map. A product named GeneXusGeneXusGeneXus is a knowledge-based development tool, mainly oriented to enterprise-class applications for the Web applications, Microsoft Windows and smart device platforms...
, originally created in Uruguay by a company called ArTech, is noteworthy. Other important developers and consultants include De Larrobla & Asociados, GreyconGreyconGreycon Ltd is an information technology firm based in London, England developing software for scheduling and the cutting stock problem primarily for the paper, film and nonwovens industries. The company's solution for the cutting stock problem is responsible for savings equivalent to 0.5 – 1.5%...
and Quanam. Tata Consultancy ServicesTata Consultancy ServicesTata Consultancy Services Limited is a global IT services, business solutions and outsourcing company headquartered in Mumbai, India. It is the largest provider of information technology in Asia and second largest provider of business process outsourcing services in India...
has its headquarters for the Spanish speaking world in Uruguay. Many of these companies have established in Zonamerica Business & Technology Park
"With a population of only three million, Uruguay has rapidly become Latin America's outsourcing hub. In partnership with one of India's largest technology consulting firms, engineers in Montevideo work while their counterparts in Mumbai sleep." - The New York Times, Sep 22, 2006
- Banking Services. Banking has traditionally been one of the strongest service export sectors in the country. Uruguay was once dubbed "the Switzerland of America", mainly for its banking sector and stability. The largest bank in Uruguay is Banco Republica, or BROU. Almost 20 private banks, most of them branches of international banks, operate in the country (Banco Santander, ABN AMRO, Citibank, among others). There are also a myriad of brokers and financial-services bureaus, among them Ficus Capital, Galfin Sociedad de Bolsa, Europa Sociedad de Bolsa, Darío Cukier, GBU, Hordeñana & Asociados Sociedad de Bolsa, etc. Uruguay has fully recovered from the financial crisis that caused a run on its banks.
- Public Sector: The state in Uruguay has an important role in the economy, Uruguay resisted the trend of privatization in Utilities and state owned enterprises in the region. Several Referendums supported the state being in control of the most important utilities and energy companies. Some of the companies have a full monopoly warranted by law (like landline telephony, water), others compete freely with private operators (Insurance, mobile telephony, Banks). Most of them are dominant in the local market. There is strong debate in the Uruguayan society about their role, and future. Some of them made a contribution to the Uruguay state treasury.
- The most important state owned companies are:Republica AFAPRepublica AFAPRepublica AFAP is a Uruguayan state-owned pension fund company, based in Montevideo. It has a 38% share in the market as of 2010 and has some 20 different branches throughout Uruguay....
(Pension Fund), AFE (Railways), ANCAPANCAP (Uruguay)ANCAP is a state-owned company in Uruguay. It is involved in the production of petroleum products, Portland cement and alcoholic beverages. It operates the Uruguay's single oil refinery at La Teja with capacity of per day...
(Energy), ANCO (Mail), Administracion Nacional de Puertos (Ports), ANTELANTELANTEL is Uruguay's government-owned telecommunications company, founded in 1974. The company has a monopoly of landline telephony and data services in the country...
(Telecommunications: Telephony, Mobiles (ANCELAncelAntel is a brand under which Uruguayan government-owned telecommunications company Antel provides mobile phone services since 1 September 1994....
and Data ANTELDATA)), BHU (Mortgage Bank), BROUBanco de la República Oriental del UruguayBanco de la República Oriental del Uruguay is a state-owned bank in Uruguay that plays a dominant role in lending and deposit in the Uruguayan market. It is also responsible for the collection of exportation taxes....
(Bank), BSE (Insurance), OSE (Water & Sewage), UTEUTEUTE is Uruguay's government-owned power company. It was founded in 1912.In 1912, a law that created this public company as the unique distributor of electricity was approved. Then, in 1931, the monopoly of communications was also granted to this company until the founding of ANTEL in 1974....
(Electricity). These companies operate under public law, using a legal entity defined in the Uruguayan Constitution called 'Ente Autonomo' (Meaning Autonomic Entity). The government also owns parts of other companies operating under private law like the National Airline Carrier PLUNAPLUNAPLUNALíneas Aéreas Uruguayas S.A. is the flag carrier of Uruguay, headquartered in Carrasco, Montevideo. It operates scheduled services within South America, as well as unscheduled cargo and charter services, with its main hub being Carrasco International Airport near Montevideo.- Foundation :The...
and others owned totally or partially by the CND National Development Corporation.
- The most important state owned companies are:Republica AFAP
Raw Data
- Industrial production growth rate: 12.6% (2006 est.)
- Electricity - production: 9,474 GWh (1998)
- fossil fuelFossil fuelFossil fuels are fuels formed by natural processes such as anaerobic decomposition of buried dead organisms. The age of the organisms and their resulting fossil fuels is typically millions of years, and sometimes exceeds 650 million years...
: 3.91 % - hydro: 95.62 %
- nuclear: 0 %
- other: 0.47 % (1998)
- fossil fuel
- Electricity - consumption: 6,526 GWh (1998)
- Electricity - exports: 2,363 GWh (1998)
- Electricity - imports: 78 GWh (1998)
- Agriculture - products: wheatWheatWheat is a cereal grain, originally from the Levant region of the Near East, but now cultivated worldwide. In 2007 world production of wheat was 607 million tons, making it the third most-produced cereal after maize and rice...
, riceRiceRice is the seed of the monocot plants Oryza sativa or Oryza glaberrima . As a cereal grain, it is the most important staple food for a large part of the world's human population, especially in East Asia, Southeast Asia, South Asia, the Middle East, and the West Indies...
, barleyBarleyBarley is a major cereal grain, a member of the grass family. It serves as a major animal fodder, as a base malt for beer and certain distilled beverages, and as a component of various health foods...
, maizeMaizeMaize known in many English-speaking countries as corn or mielie/mealie, is a grain domesticated by indigenous peoples in Mesoamerica in prehistoric times. The leafy stalk produces ears which contain seeds called kernels. Though technically a grain, maize kernels are used in cooking as a vegetable...
, sorghumSorghumSorghum is a genus of numerous species of grasses, one of which is raised for grain and many of which are used as fodder plants either cultivated or as part of pasture. The plants are cultivated in warmer climates worldwide. Species are native to tropical and subtropical regions of all continents...
; livestockLivestockLivestock refers to one or more domesticated animals raised in an agricultural setting to produce commodities such as food, fiber and labor. The term "livestock" as used in this article does not include poultry or farmed fish; however the inclusion of these, especially poultry, within the meaning...
; fishFishFish are a paraphyletic group of organisms that consist of all gill-bearing aquatic vertebrate animals that lack limbs with digits. Included in this definition are the living hagfish, lampreys, and cartilaginous and bony fish, as well as various extinct related groups... - Exchange rates: Uruguayan pesos per US dollar - 24.048 (2006), 24.479 (2005), 28.704 (2004), 28.209 (2003), 21.257 (2002)
See also
- Liebig Extract of Meat CompanyLiebig Extract of Meat CompanyThe Liebig's Extract of Meat Company was the originator of Liebig and Oxo meat extracts and later Oxo beef stock cubes. It was named after Baron Justus von Liebig, the German 19th-century organic chemist who founded it.-Early development:...
, which ran a very large and influential beef extract factory in Fray BentosFray BentosFray Bentos, the capital of the Río Negro Department of western Uruguay, is a port on the Uruguay River. It is close to the border with Argentina and about due north of Buenos Aires.-History:...
for 100 years - UruguayUruguayUruguay ,officially the Oriental Republic of Uruguay,sometimes the Eastern Republic of Uruguay; ) is a country in the southeastern part of South America. It is home to some 3.5 million people, of whom 1.8 million live in the capital Montevideo and its metropolitan area...
- Economy of South AmericaEconomy of South AmericaThe economy of South America comprises around 382 million people living in twelve nations and three territories. It contributes 6% of the world's population.-Economic development:...
- South America Life Quality Rankings - Economy and Finance